21 key people from the private sector braved the heat, avoided Covid and ignored politics to attend 90 minutes of impassioned debate on how we can best support pensioners through the cost-of-living crisis. The group – mainly CEOs and Policy Directors were hosted by the Pensions Minister and Pension PlayPen – and the result was electric.
Unlucky those who fell to Covid, couldn’t get in or simply missed the boat, events like this don’t come around often. Each participant left with two key objectives, to find at least one idea that they could implement and to get it embedded in their organisation by September. Ideas aren’t good ideas until they get done.
The focus of the meeting was Pension Credit. The DWP are reporting a highly successful Pension Credit take-up campaign that saw over 10,000 Pension Credit claims made during the week of the Pension Credit day of action on 15th June – an increase of 275% compared to that same week in 2021.
The newly appointed Pension Minister reminded the meeting that any shortcomings in pension policy should be levelled at the previous administration. Seldom has a minister phoenixed with such aplomb.
But the problems his new term in office face are the same
- High inflation increasing hardship for those already in pensioner poverty
- The risk of more pensioners falling into poverty.
- The reality that although 1.4m people claim pension credit, up to 850,000 eligible to- don’t.
The DWP’s campaign has gone well, but can more be done by the private sector to provide support to those it is or is going to provide pensions to?
Guy Opperman was in no doubt, it was not a question of “whether” but of “how”. Opperman explicitly quoted this phrase from my presentation
“The consumer and fiduciary duty are aligned in improving pension outcomes”
The meeting focussed on the five interventions I have been blogging about over the past two weeks.
Each idea was properly debated. There was strong assent for using the Mid-Life MOT to help middle aged children understand how to help their parents pick up their entitled benefits.
More contentious was my suggestion that more could be done to encourage those who knew they could not get a full state pension to cash in any small pension pots before they reach State Pension age as a bridge. DWP officials reminded me of the rules around “deprivation of capital“ which are intended to protect the tax-payer from subsidising those who could rely on their own assets before falling back on means-tested support. In my view, there is clearly a need to look again at the interaction of this principle with pension freedoms. It does not seem right to me that people who are hoarding small pots to shore against later life poverty then find that those pots deny them access to pension credit (and all it opens the door to).
Several insurers nodded vigorously when the subject of pensioner housing was introduced. Some insurers are heavily invested in later life housing and tenants who struggle to pay rent are likely to be candidates for pension credit and housing benefit. Similarly, people looking to unlock income from their houses through lifetime mortgages which swap equity for income, could look to claim pension credit first.
And there was general consent that the large individual annuity books, mainly written on a single life basis need to better understood by their insurers. Insurers in the room accepted that the consumer duty meant they needed to get single life annuitants and household partners to be clear about the “what next” if the annuitant died first. Similar issues relate to the survivor benefits of DB occupational schemes.
Perhaps the strongest debate was over the use of the pension dashboard to flag potential pension credit claims. Here the Minister told the room he had bad news for organisations who thought they had rights to other people’s data. The information needed to assess a pension credit application belongs to the user of the dashboard not the operator, so any intervention to “sell pension credit” can only be digital if data is shared with the user’s express consent.
I didn’t see too many crestfallen providers in the room. This message is out there. It is interesting to hear from the Minister that he is inundated with requests for people to use the pension dashboard for secondary processes, but I think we all now know that its primary purpose is to find and display entitlements – not to transact.
But the dashboard proved a link to the second question I’d been posed by the Minister in June. Can we get greater automation into the Pension Credit claims process?
In a brilliant explanation of how a Fintech can use shared data to identify and organise potential pension credit claims, Deven Ghelani gave the DWP a way forward for automation.
It seems to me that the pensions dashboard is a long-term solution to the problems surrounding participation and claims for pension credit. On the one hand it allows an algorithm to be built into the dashboard to flag likely claims (don’t forget every search will include entitlement to state pension). On the other, it could be used (at a user’s request) to populate a pension credit application (and as a reliable data source).
No solution to pension credit participation, automation – or the wider issue of pensioner poverty is going to be sorted overnight. This meeting focussed on what can be done between now and September and part of that is for the DWP to speak with the Pension Dashboard Programme about how the dashboard could promote applications to pension credit where entitlement looks likely and, with ambition, in the longer term potentially assist with greater automation.
The private sector and the DWP sometimes have an uneasy relationship, as could be seen by the failure of some key people to make it to the meeting. But those who came, and those who attended by Zoom and those who didn’t come and now realise they should have, are enough!
Let this work continue, it is indeed the consumer and fiduciary duty which are going to drive this work forward. Let’s hope that it encourages the private sector to think of member outcomes as holistic, and not just the result of limited saving into workplace pensions.
You can see and download all the slides presented here.
